Stock Markets in Central and Eastern Europe and their Environment: the Unachieved Transition

Purpose The purpose of this study is to modify the gravity model to identify the main determinants of the European Union (EU) bank lending to the Central and Eastern Europe (CEE) countries during 1994-2012. Design/methodology/approach This study uses both two-stage least squares and dynamic generalized method of moments to estimate the modified gravity model. Findings This study finds that the CEE countries with more developed stock markets have received the higher EU bank lending inflows. The EU banks have greater access to additional financing in the stock markets. Second, the higher stock market difference between the CEE and EU countries has boosted the EU bank lending. Compared to the developed EU stock markets, the less developed CEE stock markets have become more favorable to the EU banks seeking to earn higher profits. Research limitations/implications The CEE countries can further boost the EU bank lending inflows through deepening capital liberalization. They should facilitate easy foreign bank entry by reducing excessive bank legislations and regulations. Moreover, they can promote the EU bank lending through substantial EU bank integration. This can accelerate the major bank reform which would facilitate better bank supervision and regulations. Originality/value Most previous studies have primarily used the macroeconomic and institutional factors to explain the EU bank lending. In contrast, this study explores the growing importance of the CEE financial development and bilateral trade in explaining the EU bank lending.

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Episodic dependencies in Central and Eastern Europe stock markets

Applied Economics Letters ◽

10.1080/13504850600993614 ◽

2008 ◽

Vol 15 (14) ◽

pp. 1123-1126 ◽

Cited By ~ 11

Author(s):

Alexandru Todea ◽

Adrian Zoicas-Ienciu

Keyword(s):

Eastern Europe ◽

Stock Markets ◽

Central And Eastern Europe

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An Empirical Analysis Of Stock Returns And Volatility: The Case Of Stock Markets From Central And Eastern Europe

South East European Journal of Economics and Business ◽

10.2478/jeb-2014-0005 ◽

2015 ◽

Vol 9 (1) ◽

pp. 7-15 ◽

Cited By ~ 8

Author(s):

Jasmina Okičić

Keyword(s):

Eastern Europe ◽

Stock Returns ◽

Stock Markets ◽

Central And Eastern Europe ◽

Transitional Economies ◽

Financial Decisions ◽

Conditional Mean ◽

Overwhelming Evidence ◽

Garch Processes ◽

The Relationship

Abstract The main goal of this paper is to investigate the behaviour of stock returns in the case of stock markets from Central and Eastern Europe (CEE), focusing on the relationship between returns and conditional volatility. Since there is relatively little empirical research on the volatility of stock returns in underdeveloped stock markets, with even fewer studies on markets in the transitional economies of the CEE region, this paper is designed to shed some light on the econometric modelling of the conditional mean and volatility of stock returns from this region. The results presented in this paper provide confirmatory evidence that ARIMA and GARCH processes provide parsimonious approximations of mean and volatility dynamics in the case of the selected stock markets. There is overwhelming evidence corroborating the existence of a leverage effect, meaning that negative shocks increase volatility more than positive shocks do. Since financial decisions are generally based upon the trade-off between risk and return, the results presented in this paper will provide valuable information in decision making for those who are planning to invest in stock markets from the CEE region.

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